It is interesting reading articles like this where there is zero acknowledgement of the market's history or its capacity to be more precise, or to be less "greenwashing" as stated above. Realistically consumers had almost zero ability to choose how their power was generated to meet their demand 20 years ago. Some reports as recently as 2018 suggest that nearly 20 percent of US electricity consumers still only have access to renewable electricity supply through the unbundled REC supply pathway. The numbers are even larger when you consider how certain retail products are assembled by suppliers. Why is that so many US consumers can't access renewable energy? It is because state policy largely restricts consumers from buying or investing in more local sources.
This acknowledgement was front and center in how the market developed. It was viewed as an acceptable trade off that if a company in Florida couldn't source renewables directly in Florida, that allowing them to pull out of circulation generation from West Texas was an acceptable means to help scale the market, bend the technology cost curve down, and hopefully build a business case across the US that renewables wasn't something in the future, but something that was possible today. Showing that demand was present played and continues to play a significant role in building the clean energy future.
The market's use of instruments like RECs to track and trace generation to consumption is an elegant solution, where the tendencies of people to try and track physical power in practice is next to impossible. I would say that the Bloomberg article cited in this article above and the criticisms of RECs and market-based accounting are actually more than just a critique that the market needs to shore up the alignment of generation to consumption on a geographical or temporal basis. What the authors in the Bloomberg article are actually saying is that they do not believe US consumers should be able to choose how their power is generated and through those choices reflect it on their emissions balance sheet. That perspective is antithetical to almost every practical approach to decarbonizing the electricity sector. The power sector is fundamentally based on contractual delivery of power to consumers. It is how utilities do it, and increasingly how individual customers can do it as well. The question of how much responsibility a consumer should have for other generators and the emissions they cause on the grid was partly reflected in the requirement of dual reporting between market-based and location-based accounting. The Bloomberg article gets wrong that companies only account for their emissions using market-based accounting. Companies are required to report both location and market-based emissions.
Certainly, there is and should be a time for bringing more granular alignment to the market around where and when your power is generated in relation to consumption. But I would caution throwing the current system and approaches under the bus entirely until there is a clear runway ahead for doing the more granular alignment. At least authors of articles should acknowledge the reasons for why RECs are allowed to be bought within the US market and why annual matching has been accepted as a legitimate. Are these practices without deficiencies? No, but they were clearly necessary to get to this point so we can discuss how to be better moving forward.
Your point is very well taken! My effort at brevity elides the fact that we have made tremendous strides in advancing renewables through existing systems. I think we are in violent agreement that the path forward does not mean getting rid of environmental attributes. In fact, quite the opposite. If we're not careful, that path will be chosen for us. And in order to stave off this terrible outcome, we need to push strongly on the development of more credible attribution systems. This is a today opportunity and if we don't take the initiative, I fear we will lose the opportunity altogether.
It is interesting reading articles like this where there is zero acknowledgement of the market's history or its capacity to be more precise, or to be less "greenwashing" as stated above. Realistically consumers had almost zero ability to choose how their power was generated to meet their demand 20 years ago. Some reports as recently as 2018 suggest that nearly 20 percent of US electricity consumers still only have access to renewable electricity supply through the unbundled REC supply pathway. The numbers are even larger when you consider how certain retail products are assembled by suppliers. Why is that so many US consumers can't access renewable energy? It is because state policy largely restricts consumers from buying or investing in more local sources.
This acknowledgement was front and center in how the market developed. It was viewed as an acceptable trade off that if a company in Florida couldn't source renewables directly in Florida, that allowing them to pull out of circulation generation from West Texas was an acceptable means to help scale the market, bend the technology cost curve down, and hopefully build a business case across the US that renewables wasn't something in the future, but something that was possible today. Showing that demand was present played and continues to play a significant role in building the clean energy future.
The market's use of instruments like RECs to track and trace generation to consumption is an elegant solution, where the tendencies of people to try and track physical power in practice is next to impossible. I would say that the Bloomberg article cited in this article above and the criticisms of RECs and market-based accounting are actually more than just a critique that the market needs to shore up the alignment of generation to consumption on a geographical or temporal basis. What the authors in the Bloomberg article are actually saying is that they do not believe US consumers should be able to choose how their power is generated and through those choices reflect it on their emissions balance sheet. That perspective is antithetical to almost every practical approach to decarbonizing the electricity sector. The power sector is fundamentally based on contractual delivery of power to consumers. It is how utilities do it, and increasingly how individual customers can do it as well. The question of how much responsibility a consumer should have for other generators and the emissions they cause on the grid was partly reflected in the requirement of dual reporting between market-based and location-based accounting. The Bloomberg article gets wrong that companies only account for their emissions using market-based accounting. Companies are required to report both location and market-based emissions.
Certainly, there is and should be a time for bringing more granular alignment to the market around where and when your power is generated in relation to consumption. But I would caution throwing the current system and approaches under the bus entirely until there is a clear runway ahead for doing the more granular alignment. At least authors of articles should acknowledge the reasons for why RECs are allowed to be bought within the US market and why annual matching has been accepted as a legitimate. Are these practices without deficiencies? No, but they were clearly necessary to get to this point so we can discuss how to be better moving forward.
Your point is very well taken! My effort at brevity elides the fact that we have made tremendous strides in advancing renewables through existing systems. I think we are in violent agreement that the path forward does not mean getting rid of environmental attributes. In fact, quite the opposite. If we're not careful, that path will be chosen for us. And in order to stave off this terrible outcome, we need to push strongly on the development of more credible attribution systems. This is a today opportunity and if we don't take the initiative, I fear we will lose the opportunity altogether.